Chris Morcom, Director and Adviser at Hewison Private Wealth says the government’s election budget was not surprising but was a disappointing outcome for higher income earners who will face increases to contributions tax and restrictions on superannuation contributions. ‐

“June represents a golden opportunity for higher income earners to turbo charge their retirement savings before a suite of new superannuation laws come into play – but investors will need to plan accordingly,” Mr Morcom said.

Mr Morcom says there are three specific super strategies to consider pre‐June 30 that will help maximise your retirement savings and reduce your tax bill:

1.     Check your salary sacrifice arrangements and avoid paying extra tax for exceeding super contribution caps

As of the 1st of July, 2012, superannuation concessional contributions will be reduced from $50,000 to $25,000 for all investors and will remain that way until at least July 2014. In the meantime, the transitional Concessional Contribution cap of $50,000 for those over 50 still applies until 30 June 2012.

“Investors should seek professional advice to maximise this small window of opportunity, ,” Mr Morcom said.

“Those that can, especially the self‐employed, should consider maximising their contribution to super pre 30 June and review their salary sacrifice arrangements. The advantages are of course the difference between a flat 15% tax rate received on investments within super, as opposed to getting taxed at your marginal rate for having that money sit outside of super.

“However, don’t get caught out by the reduced cap requirements effective as of 1st July this year. It pays to investigate how much you might get taxed if you do exceed the limits and revise your strategy  accordingly.

Morcom said the Government’s announcement of a higher contributions tax for high income earners is yet another reason to get your personal contributions in pre‐June 30.

“For those with incomes in excess of $300,000 per annum, a higher 30% contributions tax will apply to contributions that are in excess of the threshold as of 2012/13. Assessable “income” will include salary, adjusted fringe benefits, total net investment loss, target foreign income and tax‐free Government pension and benefits.

“It’s important to review your strategy holistically and know if you fall into this category,” he said.

2.     Transfer in‐specie assets into your SMSF this year to reduce losing out to market risk

“Time is running out to take advantage of in‐specie asset transfers, a popular strategy for reducing exposure to market risk, with the end date for in‐specie contributions 30 June 2012,” Mr Morcom warned.

“Investors should take advantage of weaker investment markets by transferring any personally‐ owned listed assets, or business real estate property to their super fund, as a contribution that can be made “off‐market”, Mr Morcom said.

“If you’re a high income earner, it makes sense to transfer your assets into your superfund to shield yourself and your assets from market risk, and it can be a very tax‐efficient way to build a retirement base,” Mr Morcom said.

In‐specie and off‐market asset transfers are transactions whereby superannuation funds and SMSFs can transfer assets, in lieu of cash, to or from fund members or their related entities.

As of July 1 this year, investors will have to sell their asset on the market first and rebuy them before being able to transfer them into their super fund, exposing themselves and their assets to the chance of market fluctuations during the transaction.

3.     If you’re self employed, double your tax deduction on contributions paid to your super.

“This is a strategy that few people are aware of due to the infancy of the recent tax office interpretation determination, whereby people who have an SMSF and are eligible to claim a tax deduction to personal contributions made to super, such as the self‐employed, have the potential to get a double deduction in the current financial year,” Mr Morcom said.

”For example, if you have a super contribution limit of $25,000 now, you’d put this into your super in June, then put in a further $25,000 but hold it in reserve then put it into members’ accounts in July. This is not an excess contribution because the second amount is not allocated to members until July.

“It’s a good strategy for those people who’ve realised significant capital gains in this financial year, and are wanting to put away as much as they can to fund their retirement needs, while reducing tax. However, it’s only applicable to people who don’t receive employer contributions,” Mr Morcom said.

“When in doubt seek the professional help of your financial adviser to ensure you are eligible to utilise various strategies and aren’t in breach,” he said.